Scottish headache for the Abbey

Analysts fear it may be forced to pump more capital into the operation to shore up its balance sheet in the wake of new 'realistic' rules being introduced by regulator the Financial Services Authority.

Worries over Abbey came as independent expert Ned Cazalet estimated that UK life assurers have sold £10bn of shares on top of the £7.5bn offloaded by Standard Life ahead of the FSA rules.

Abbey, which is this week expected to report its second full-year loss in a row, has already poured hundreds of millions of pounds into Scottish Mutual. It is in talks with the FSA and is expected to warn the City that it is not clear what impact the new regulations will have on its figures.

Broker JP Morgan said the group is facing 'increased uncertainty' over the life insurance business.

Separately, insurer Old Mutual, up a penny to 94 1/2p, announced a £400m capital-raising rights issue at its South African banking arm Nedcor. Operating profits for the full year fell 10% to £650m.